Dark money comes to Canadian politics

This summer, a loophole in our federal election finance laws will be exposed as a record amount of money is spent on political advertising by groups whose members, directors and donors will remain secret.

This undisclosed and unlimited political advertising is a form of dark money, a term that refers to funds given to politically active non-profit organizations that can receive unlimited donations from corporations, individuals, and unions but are not required to disclose their donors.

Starting with the issue of the writs of election, during an election period the Election Act (Canada) regulates political advertising that is conducted by third parties such as corporations, unions and unincorporated organizations. There is a limit to the amount of election advertising expenses a third party can incur, a requirement to register with Elections Canada and file a report listing the third party’s contributions, expenses and donors once the third party has incurred $500 of election advertising expenses, and a requirement to have the report audited once the third party incurs $5000 of election advertising expenses.

The loophole lies in the fact that these requirements only apply to third parties that incur political advertising expenses during the election period, meaning after the writs have been issued. Before the election period begins, there are no rules that require third parties to publicly disclose their members, directors or donors, and no limits on how much money they can spend on political advertising.

The complete lack of financial limits and transparency provide a powerful incentive for well-funded and politically-active groups who wish to influence the outcome of an election to run large political advertising campaigns in the lead up to an election, stopping just before the election period begins so that the transparency rules do not apply to them.

With this loophole available to them, third party political advertisements will be coming soon to your television, radio or favourite website. Some of these advertisements could come from well-known and self-identified corporations or unions. Some may come from opaque and previously unknown organizations with no publicly identified owners or supporters. While some organizations may voluntarily disclose their members and donors, there is no require- ment for them to do so and there is no means of independent verification if they do.

Commentators have recently bemoaned the lack of expense limits on third party political advertising in the pre-election period, and with valid concern. However, such limits have been examined by the courts in British Columbia and held to be unconstitutional. The Supreme Court of Canada is yet to consider this question, so any limit placed on the amount of money third parties can spend on political advertising outside of an election period will likely be challenged all the way to the Supreme Court.

More concerning than the lack of expense limits is the complete lack of transparency regarding these pre-election period advertisements. Canadians deserve to know who is behind such advertisements in order to meaningfully participate in the upcoming fall election. The purpose of election expense limits during the election period is to create a level playing field for those who wish to engage in the electoral discourse, enabling voters to be better informed. A flood of political advertising funded by dark money in the lead-up to the federal election could effectively circumvent those limits, negatively impacting the fairness of the election.

If third parties are allowed to incur unlimited expenses on trying to influence how Canadians vote, the least that should be required of them is that they make meaningful disclosure of who is behind them and how they are being funded.

It may be too late to prevent dark money from affecting the 2015 federal election, but legislatures across the country should take note of what happens on the airwaves this summer. Given the endless campaign cycle of contemporary Canadian politics, the democratic rights of Canadians should be safeguarded at a minimum by extending the transparency requirements for third party election advertising to the time in between election periods.

While organizations may voluntarily disclose their members and donors, there is no requirement for them to do so